ASSOCHAM NATIONAL COUNCIL ON CIVIL AVIATION

ASSOCHAM CIVIL AVIATION SECTOR Critical issues:

1. Create an inter-ministerial task force for making India a leading global aviation hub. The task force should have JS level officers from finance, home, external affairs, tourism, environment, defense, commerce and industry, highways and railways. India has to be packaged and presented as a world class destination a la Singapore and Dubai. We have to evaluate every process and experience that an international tourist into India goes through from entry to exit. Just building great airports will not make India an aviation hub. The task force should meet once every month and create measurable output. Should be headed by Secretary, Ministry of Finance since the ultimate impact is on national wealth and employment generation. 2. Notify ATF as a declared good at the earliest. It is much more prudent to generate tax finished goods and services than the raw material (ATF), else the cascading effect of taxes completely distorts the competitiveness of the sector. ATF should have a uniform levy of 4% across India. 3. Promote the domestic MRO industry by removing all taxes and providing it a 'deemed export' status. All Indian carriers find it cheaper to fly empty aircrafts and crew to foreign locations for repairs than to do it in India. This is a national tragedy. High tax rates have led to negligible tax revenues. The jobs opportunities in this labor intensive sector have been lost to countries like Singapore, Malaysia, UAE, Sri Lanka etc. This should be treated as an import substitution measure than a tax rebate. The resultant jobs and development of ancillary industries will create more tax revenue for the government

4. Facilitate cargo growth by way of process reforms, greater automation, 24x7 Customs operations and development of Air Freight Stations (AFS). Trans-shipment cargo is a low hanging fruit. Nearly 30% of India's cargo (by value) goes by air. We can't neglect it any further.

Important issues:5. Develop investor friendly airport tariff policies to encourage greater private sector investments in airports. There is a significant difference of opinion between the AERA and the airport operators. Most of the AERA decisions have been challenged in court. All this is affecting investor sentiment. Will hurt the prospects of green-field airport projects like Navi Mumbai, Goa and Kannur etc.

6. Allow FDI by foreign airlines into Indian carriers for greater fund infusion, global connect and techno-managerial expertise. May also create new airline companies. Enhanced competition will help passengers.7. Promote development of low cost airports in Tier 2/3 cities. Creation of an innovative low cost airport model, establishment of the Essential Air Services Fund (EASF) to provide viability gap funding and implementation of investor friendly policies are key. 8. Facilitate growth of General Aviation by way of a clear policy, tariff structure and operating procedures. Charter flight operations have to be encouraged to boost tourism. 9. Adopt a policy of non-interference in ticket fares. These should be left to market forces. Choice of mode of travel is discretionary. If fares are excessive, people will shift to other modes. Video-conferencing is a hidden threat to airlines. 10. Review the 5 year/20 aircraft rule for global operations by Indian carriers. These should be reduced to 1 year / 5 aircraft threshold. 11. Facilitate growth of world-class aviation education facilities in India by way of attractive fiscal and monetary incentives; and easy entry of global players.